Rinehart ups Fairfax stake to 18pc

Mining magnate
Gina Rinehart
is believed to have raised her stake in
Fairfax Media
to 18 per cent as the federal government warned any plan to close its metropolitan newspapers would pose a threat to democracy.

Mrs Rinehart, who is Fairfax’s largest shareholder and locked in a battle with chairman
Roger Corbett
and directors for board representation, is believed to have acquired 69.8 million shares, or 3 per cent, at 60¢ a share after-market on Friday. It is understood the trade, worth $41.9 million, was made by Morgan Stanley, which acted on behalf of Mrs Rinehart earlier this year. A further 20 million Fairfax shares changed hands during trading on Friday.

The last two days of trading in Fairfax have been the heaviest since the Fairfax family sold out of the company in February.

Mrs Rinehart, whose personal fortune is an estimated $29 billion, is also believed to have been the buyer of 42 million Fairfax shares on Thursday, which would have taken her stake to 15 per cent that day. It is understood she intends to raise her stake to 19.9 per cent.

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“People throughout the government are watching this very closely," said a senior government source. “If these vaunted Fairfax Media newspapers were closed down, it would rend the fabric of democracy in Australia," he said.

“These are just profoundly important issues that people need to start thinking about."

Two major institutional investors, including fund manager Allan Gray which owns about 9 per cent of Fairfax, have suggested the metropolitan newspapers – The Sydney Morning Herald, The Age and The Canberra Times – could ultimately be shut down if they did not become profitable.

“There is no desire to interfere or play politics with this," said the senior government source. “You have to have a real sense of unease in your stomach when you think of the contribution that the Fairfax mastheads make to democracy.

“People would feel the same way about the ABC if it was under such financial stress that it had to close."

Fairfax and News Ltd, the country’s two biggest newspaper publishers, are about to radically overhaul their metropolitan newspaper divisions, transforming them from print-based businesses to digital-focused enterprises.

There is speculation News may cut 400 to 500 editorial jobs from a total editorial staff of about 3000, and that Fairfax may cut 150 from a total of 800 metropolitan editorial staff. Sources said News would start its roll-out in Adelaide soon, and other metro papers in late August and September. Fairfax shares closed up 0.5¢ at 60.5¢ on Friday.